After much struggle and angst, I managed to get the "call" in Treasury bonds correct. This appears to be a secular, sustainable move towards lower yields or higher bond prices. Long term Treasury bonds have been consolidating that initial move over the past 6 to 7 weeks, and they appear to be breaking out again.
So why do I think long term Treasury bonds are going higher? Look at a daily chart (see figure 1) of the Ultra Short 20 + Year Treasury ProShares (symbol: TBT). This is a 2x leveraged ETF product that tracks inversely to the daily performance of the Barclays Capital 20+ Year U.S. Treasury index. The black dots are key pivot points, and TBT is breaking below a key pivot point (i.e., support level) in an established down trend. This is bearish for TBT, which is bullish for bonds.
Figure 1. TBT/ daily
Figure 2 is a daily chart of the i-Shares Lehman 20 + Year Treasury Bond Fund (symbol: TLT). This ETF tracks the Barclays Capital 20+ Year U.S. Treasury index. The indicator in the lower panel is the on balance volume indicator with a 40 day moving average, and TLT is under accumulation. The black dots are normal pivot points, and these show a series of higher lows, which is bullish.
Figure 2. TLT/ daily
This week the equity markets are looking a little "stressed". Within the context of a possible failed signal in equities, Treasury bonds are starting to look attractive once again.